Maya Schadeck

26.06.2023

Real-Time Bidding: Help Rise Make Matches Between Advertisers And Users

What do Tinder and real-time bidding (RTB) have in common?

Tinder allows its users to filter and customize their preferences such as distance, age range, gender, and much more. This helps to narrow down matches.

Real-time bidding, on the other hand, is a process used in programmatic advertising where ad impressions are bought and sold in real time through automated auctions.

Both, Tinder and real-time bidding rely on user preferences to drive their decision making processes. They focus on personal preferences to match users with potential partners. Real-time bidding though shows users ad content that’s most relevant to them with the help of cookies and artificial intelligence.

But before we get into the nitty-gritty, let’s check out the basics.

What is real-time bidding?

Real-time bidding is one of the key aspects of programmatic advertising, which is a process of buying and selling ads in real time. In other words, real-time bidding is an automated digital auction process in which the highest bid from relevant ads will win the placement.

The RTB-process takes place in milliseconds before a website even loads. So you won’t even notice it’s happening.

But let’s take a step back.

Traditionally when advertisers bought media, they bought thousands of impressions. This resulted in every website visitor seeing the same ad, regardless of age, status, interest, etc.

Imagine the following: a 60 year old who is interested in old-timer cars and a 21 year old who is passionate about basketball see the exact same ad on bathrobes when browsing a website.

Wouldn’t it be much better if everyone saw an ad that interested them? This is where real-time bidding comes into play. RTB creates an auction environment where advertisers can bid to show relevant ads to specific users.

The data is based on the users’ preferences, like user demographics, interests, ad browsing behavior, and much more. Now, several bidders submit their bid and the highest bidding advertiser wins the opportunity to display their ad to a specific user at that moment.

The result is the following: The 60 year old who is interested in old-timers sees an ad on mechanical spare parts for his Mercedes-Benz 300SL whilst the 21 year old interested in basketball might see an ad on Jordan One take 4 basketball shoes from Nike.

Thanks to user relevant data and artificial intelligence, real-time bidding has the power to deliver the right ad to the right person at the right time.

How does real-time bidding work?

Real-time bidding is a part of the programmatic advertising process and involves three platforms for ad buying:

Supply-side platforms (SSP)
Ad exchanges
Demand-side platforms (DSP)

These three platforms work together to get the most relevant ads in front of specific users. But how does that exactly work? It all starts with a simple click. Once a user clicks on a link to go to a website, real-time bidding begins.

Between the time a user clicks on a search result in Google and a website loads, the website’s publisher sends available ad space to the supply-side platform. The SSP then looks at the user’s cookies, which include data about the user’s demographics, interests, web activity, etc.

Then the demand-side platform assigns a value to the user and places a bid on the ad space based on the cookie information of that user. Finally, the supply-side platform receives the bids and picks a win, based on the highest bid.

Once the ad is chosen, the website loads and the user sees the winning ad on his screens. Don’t forget that all of this happens within a few milliseconds. Impressive, isn’t it?

What are the types of real-time bidding?

Advertisers and publishers have various options to engage in the automated buying and selling of ad impressions. This helps them to optimize their campaigns and maximize their reach and effectiveness.

So, you might not be surprised that there are different types of real-time bidding:

Open auction
Private auction
Programmatic guaranteed
Preferred deals
Deal ID

Open auction

Open auction is also known as open exchange and is the most common form of real-time bidding. As explained above, advertisers bid on available ad impressions in real time and the highest bidder wins the opportunity to display their ads.

Private auction

Private auction targets a closed group of buyers who are invited to participate in an auction. A private auction provides more exclusivity because the inventory is only available to a limited number of pre-approved buyers.

Programmatic guaranteed

Programmatic guaranteed, also known as programmatic direct, describes a process in which a direct deal is established between the buyer and the publisher. They agreed in advance upon the conditions of the deal. The ad inventory is hereby reserved for a specific buyer. The transaction is still facilitated through programmatic technology, which ensures automation and efficiency.

Preferred deals

Preferred deals are somewhat similar to programmatic guaranteed. The only difference is that the inventory is not exclusively reserved for the buyer. Instead, publishers offer the inventory to selected buyers at a pre-negotiated price, granting them priority access before it becomes available in an open auction.

Deal ID

Deal ID is a kind of unique identifier which is assigned to a specific deal between a buyer and a seller. It allows for the creation of a private marketplace where the buyer accesses premium inventory and has the opportunity to negotiate terms.

What is the benefit of real-time bidding?

Real-time bidding is on the rise. Its CAGR is expected to grow by 32.9% in 2024. This shows that there are a couple of advantages to employing real-time bidding for both advertisers and publishers.

Target specific audiences: Real-time bidding allows for more accurate targeting as you can ensure that your ads are reaching the right customers at the right time who want what you offer. This is because you buy one impression at a time. That means that every time a website visitor or mobile app user visits a publisher’s website, you are able to assess that person’s particular profile and see if it fits your target audience.

Better tracking ability: You can easily monitor your campaigns without relying on external vendors. No need to reach out to other stakeholders, simply get them from your DSP. This means you have more agility to decide quickly if a campaign isn’t performing as expected. For example, you might realize that switching one keyword for another boosts your campaigns performance which translates into better ROI.

More cost-effective: Just too often, brands launch campaigns that only reach a handful of people out of their target audience. The precision of real-time bidding allows marketers to spend their budget on high-value impressions, instead of spending their valuable money on users who don’t fit their profile.

Increase brand awareness with real-time bidding

Real-time bidding makes online advertising fast and easy, just like Tinder revolutionized the dating ecosystem. Instead of suffering from the back-and-forth you can focus on tracking results, increasing ROI and empowering your brand to grow. For more information, please visit our website or check out our knowledge center.